Doing Business

How Can We Leverage Singapore Financial Hub with The Rest of The ASEAN?

Nora Setiawan

November 17, 2020

Singapore is well known as the fourth largest financial centre in the world and the top logistics hub, possessing the world’s 10th largest foreign reserve. Singapore also has a highly developed economy for both market and trade based. Lastly, the country is home to one of the busiest ports in the world. In this article, you will be given information about the leverage of Singapore as the financial hub with the rest of the ASEAN countries.

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The Reasons Singapore has Become The Financial Hub

Singapore offers a pro-business environment, excellent infrastructure, international connectivity, highly skilled and cosmopolitan labour force to the financial institutions and FinTechs. 

Based on IMD World Competitiveness Ranking 2020, Singapore is known as the number one of the most competitive economies. Not only that, the country has over 20 Free Trade Agreement (FTAs) and over 80 Double Taxation Agreements (DTAs).

According to the World Bank’s Doing Business Survey 2020, Singapore also has become the number 2in the world for ease of doing business. With a highly skilled workforce, Singapore has everything that every foreign investor needs. Singapore is also armed with strong capabilities across wealth and asset management, foreign exchange and derivatives, insurance and risk financing, fixed income, infrastructure finance, as well as Fintech and innovation.

Moreover, the Singaporean government has a regulatory environment and supportive policy measures to help out foreign investors to expand their businesses.

For instance, the Monetary Authority of Singapore (MAS) offers funding support to firms and individuals participating in the financial sector through the Financial Sector Development Fund (FSDF).

The FSDF itself has an action to promote Singapore as a financial centre, develop and upgrade skills which are required by the financial service sector. Additionally, it supports educational and research institutes, followed by developing infrastructure to support the financial sector.

Thus, Singapore’s legal and tax regime is considered one of the most investor-friendly in the world. Its financial system is also integrated with the international financial markets. No surprise, if foreign investors are focusing to expand the businesses in Singapore.

Leverage of Singapore Financial Hub Towards ASEAN Countries

Singapore serves as the financial hub in ASEAN

Singapore as a gateway to ASEAN has resulted in the development of integrated supply chains and enabled the country to outrun other holding locations in the region, such as Malaysia. Singaporeans also share various linguistic and cultural connections with other ASEAN countries, while they are still keeping English as the main language in the workplace. 

Furthermore, the country’s highly skilled labor force is an important thing for investments in ASEAN, and the investors can create effective investment strategies that tackle the ASEAN’s diversity and minimize uncertainty.

Singapore has long been an attractive market for foreign investors, and it is proven by the country’s favourable regulatory and business environment. The fact is many strong investors are interested and maturing the fintech sector to continue making it an attractive base for firms to tap the ASEAN’s growth economy.

Not only become the financial hub, but Singapore is also becoming a FinTech hub globally. Its infrastructure and regulations are friendly for foreign businesses to be set up in Asia and overseas. 

Financial technology or FinTech has the potential to dramatically increase the scope of financial services. It is benefiting not only for individuals and communities but also to SMEs which comprise the most economic activity in ASEAN countries. The mobile application technology will enable them to access capital and advisory services in developing their businesses.

In 2018, the MAS said that 380 participating investors who enrolled for the Singapore FinTech Festival’s deal-making platform, Match, have invested up to a total of US$6.2 billion in ASEAN enterprises, and an additional US$6 billion allocated over the two years.

The Global Investor Summit brings together the investment and enterprise communities and showcases the best of next-generation ASEAN startups and growth enterprises across all sectors, FinTech and beyond FinTech.

Singapore invited ASEAN central banks and regulators to Singapore FinTech Festival, which had a focus on ASEAN in order to prepare for greater financial innovation within the ASEAN region. In addition, to be a greater incorporation of FinTech and cybersecurity have to seek a further scale up the capacity of ASEAN central bankers and financial regulators in these areas.

Back in 2018, The Central Banks, Regulators and Supervisors (Ceres) Forum was launched, and it was the first global platform for central banks, regulators and supervisors to share information affecting global security and resiliency.

Still in the year of 2018, Singapore promoted a session on Ceres during the FS-ISAC Asia-Pacific Summit, arranged for Central Banks and regulators to better understand the forum, training and analytical services. It also secured a commitment for the ASEAN Senior Level Committee on Financial integration to develop the process of information-sharing on cybersecurity.

The relationship between Singapore and Thailand is vigorous as they have pilot projects to link their real-time retail payment systems. The payment will potentially make it easier for a broader network of real-time retail payment system linkages among AMS.

There are successful projects that Singapore and one of the ASEAN countries have done. Moreover, Vietnam has been successfully doing projects with Singapore. At the end of 2018, Vietcombank sold 3% of its capital to GIC, the investment fund of the Government of Singapore, and it earned VND 6.200 billion. Thus, Vietcombank is continuing to plan on selling another 6.5% of its shares until today.

The market is also seeing Softbank Vision Fund and GIC deal to invest up to 300 million USD in VNPay, a Vietnamese payment intermediary. Meanwhile, J Trust is planning to invest in CBBank, also GP Bank and DongAbank are finalizing to submit to the authorities for approval. Hence, investors such as Srisawad Thailand and Clermont Singapore can acquire the companies.

Singapore as the financial hub in Southeast Asia is so promising, as a lot of ASEAN countries take advantage of expanding their businesses in the market. The country also has a lot of successful projects together with many ASEAN countries, and it can be the reason why foreign investors should invest in the country!

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